Singapore-based cryptocurrency venture capital firm LuneX Ventures is targeting the final close of its first $10- million fund in October.
The crypto fund has received $6 million in capital commitments so far, up from $4 million during its launch in August last year. The fund has a pool of 20 limited partners (LPs), comprising high net worth individuals (HNWIs), technology corporates from Japan and Europe, and family offices from Singapore.
According to LuneX Ventures founding partner Kenrick Drijkoningen, fundraising has been a challenge for the firm. Investors still lack critical understanding about cryptocurrencies, blockchain and their potential applications, and struggle to see the long-term benefits of investing in the sector.
“We very much see a split. There are those who understand the space and the ecosystem and are quite easy to convince, and there are those can take more than six months just to get to a stage where they would consider writing a cheque,” said Drijkoningen.
LuneX is one of very few crypto VC funds globally. Other prominent crypto funds are mainly based in the US, such as Andreessen Horowitz’s $300-million crypto fund, PolyChain’s $175-million blockchain fund, and Wavemaker Genesis’ blockchain fund.
One source told DealStreetAsia that it has been a tough capital raising market for crypto funds since the bear market last year.
Drijkoningen declined to comment on the progress of other crypto funds, but said this will be part of a long journey of investor education for LuneX.
Talking about LuneX’ fund performance, he added, the net asset value (NAV) has risen by 40 per cent since August, and clocks an IRR of 27-28% compared to about 20% for the top quarter percentile of funds in the market.
The wider market skepticism around blockchain also means that LuneX gets to enter investments on the cheap. In coming months, LuneX will be investing in two more startups: one in the US, and one in Singapore.
“We think the opportunity to deploy is now. The crypto markets are also at a discount. After five years, we expect to be at the top of a full cycle, which will be a good time to exit the fund,” said Drijkoningen.
To date, LuneX Ventures has deployed in five equity investments, two private tokens and 13 public tokens (liquid portfolio). Its ticket sizes range from $250,000-$300,000 across equity and token investments.
LuneX seeks blockchain startups that fill gaps in the wider cryptocurrency infrastructural ecosystem. This may be in form of custodians, know-your-customer (KYC) and anti-money laundering (AML) systems, derivative exchanges and stablecoins.
Its portfolio companies include: Merkle Science, a Singapore-based blockchain data analysis startup; Terra, a Singapore-founded stablecoin; Sparrow Exchange, a Singapore-based crypto options exchange; and Propine, a Singapore-based storage facility for blockchain-based digital assets.